Government Debuts New
Refinancing, Modification Initiatives
Earlier this month Fannie Mae began making two new initiatives -
Home Affordable Refinance and Home Affordable Modification -
available to its servicers and borrowers as part of the Obama
administration's Making Home Affordable program. The two initiatives
are designed to significantly expand the numbers of borrowers who
can refinance or modify their mortgages to a payment that is
affordable now and into the future.
Home Affordable provides crucial tools to mortgage lenders and
homeowners coping with financial hardship and declining home
prices," said Herb Allison, Fannie Mae's president and
chief-executive-officer. "Potentially millions of homeowners could
qualify for and benefit from these initiatives. The people of Fannie
Mae will do all they can to make the program a success for
homeowners across America and to advance the nation's housing
The Home Affordable Refinance program includes new refinancing
flexibilities for homeowners whose loans are owned by Fannie Mae.
Several of the key features of this program include extending
additional flexibilities that do not force borrowers to buy new or
additional mortgage insurance if the loan at the time of the
refinance is more than 80 percent of a home's value; and,
streamlined processing that begins in April. Under the guidelines,
all 1,600 lenders and 29,000 mortgage brokers that use Fannie Mae's
Desktop Underwriter platform will be able to process an application
to refinance any existing Fannie Mae loan, allowing for greater
lender origination capacity and easier refinancing for borrowers.
Through the Home Affordable Modification, Fannie Mae will work with
loan servicers across the country to help distressed borrowers
modify their current loan into a mortgage that is more affordable
and sustainable. Loan servicers participating in the program may
reduce interest rates, lengthen the payment time frame or take other
steps, such as principal forbearance, to bring the monthly payments
down to as low as 31 percent of the borrower's gross pre-tax income.
To ensure borrowers currently at risk of a foreclosure have the
opportunity to apply for a Home Affordable Modification, Fannie Mae
servicers have been directed not to proceed with a foreclosure until
a borrower has been evaluated for the program.